Money Management

The number might surprise you. 

To say that consumers had a tough time with inflation in 2022 would be an understatement. Many people had no choice but to rack up debt on their credit cards and dip into their savings just to cover their essential bills. And a lot of people also had to make hard choices, like cutting back on things that are important to them, because of soaring living costs.

It’s somewhat surprising (in a good way), then, to hear that many consumers managed to save money in 2022. In fact, New York Life’s latest Wealth Watch survey found that Americans added an average of $5,011 to their savings accounts last year. And that’s pretty impressive.

That said, if you didn’t manage to add to your savings in 2022, don’t sweat it. A lot of people barely managed to cover their bills due to inflation, so there’s no need to get down about a lack of savings growth.

But there are steps you can take to meet your savings goals in 2023. Here are some to employ.

1. Put yourself on a budget

Sticking to a budget won’t make your bills less expensive. But it might help you manage them better.

Once you’re on a budget, you’ll be able to see how much you spend each month on essentials versus items that are wants rather than needs. And that might prompt you to change some of your spending habits, thereby freeing up more money to save.

2. Spend carefully on non-essentials

Having a night out with friends is fun, as is dining out. But let’s face it — these are things you can live without. And if you’re willing to cut back substantially, you might make great progress on your savings goals in 2023.

To be clear, you shouldn’t say you’ll never go to the movies or dine at a restaurant with friends. Rather, you should do those things sparingly if you’re eager to save, and if you didn’t manage to save the way you wanted to in 2022.

3. Get a side hustle

Cutting back on spending might help you save more money this year. But if you really want to give your savings a solid boost, consider getting a side hustle.

The money you earn from that job won’t be earmarked for things like your rent or car payments, because you’re already paying for those. So you’ll have a prime opportunity to sock the bulk of what you earn away in the bank (minus what you owe the IRS in taxes, assuming you’re paid as a freelancer and don’t have taxes deducted from your earnings upfront).

A lot of people struggled to save money in 2022, so even though consumers as a whole saved an average of $5,011 last year, rest assured that many people no doubt saved $0. In fact, all it takes is a small percentage of super savers to pull the average savings amount upward. So it may be that most people saved $0 to $500 in 2022, but because a select few saved $100,000, it averages out to $5,011.

The point, therefore, is to not get down about last year. Instead, look ahead to 2023, and do what you can to hit your savings target.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has positions in Target. The Motley Fool has positions in and recommends Target. The Motley Fool has a disclosure policy.

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Solving the problem from multiple fronts. 

We all know the popular saying: “You can have it good, or you can have it cheap. You can’t have both.”

Whoever coined this saying probably didn’t shop at Costco. At least, that’s the consensus of Costco fans when it comes to their in-house Kirkland Signature brand of goods.

From olive oil to batteries to toilet paper, people tend to rave about anything with that Kirkland label. If fans are to believe, the products are not only great for your finances, but they’re of name-brand quality (or better, in some cases).

But how is it that Costco manages to make such high-quality products while still keeping prices so low? Is it really just a matter of the store doing as its customers do: buying everything in bulk?

As it turns out, Costco’s method of keeping Kirkland products affordable isn’t (entirely) about getting that wholesale discount. No, there’s a lot more to it, both behind the scenes and on the shelves.

A focus on efficiency

There are two parts to making money: overhead and sales. You need to keep your own costs low, while making enough sales to cover your costs — and, ideally, with a bit of profit, too.

Costco’s secret weapon to keep overhead down? Efficiency.

Everything about a Kirkland Signature product is designed to be as efficient as possible, right down to the packaging. In fact, a common anecdote about Costco’s methods is how it redesigned the packaging of its Signature cashews to fit more products on their trucks.

Little things, like using your transport space more efficiently, can have a remarkably big impact on your bottom line.

But it’s not just the packaging. Even the process of selecting which products to sell under the Kirkland banner — or in the store at all — is efficient and pragmatic. For instance, Costco tends to only stock about 3,800 different products at a time (competitors can easily stock ten times that, or more).

Additionally, the company doesn’t seem to be shy about ditching products that simply don’t work. If its house-brand products can’t compete with brands that already corner the market, they pull the products and move on. (Ever wonder why there’s no more Kirkland cola? It couldn’t compete with Pepsi.)

Familiar brands, new labels

Of course, no matter how low you keep your overhead, it comes down to sales in the end. Some companies go full-bore behind having the lowest prices, no matter what it means for quality — you know who you are — and rely on high sales volumes to keep their margins in the black.

Costco, on the other hand, takes a more balanced approach.

Does Costco rely on wholesale discounts to keep their costs low? Absolutely. But instead of relying solely on volume of sales, it has focused more on building powerful brand loyalty that keeps customers coming back time and again. (Ask any Costco fan about their favorite Kirkland products and you’ll learn a lot about building a strong brand!)

A big part of how Costco pulls this off — without excessive overhead — is to put its own labels (or, in some cases, joint labels) on products from popular brands. For example, it’s an open secret that Duracell manufactures Kirkland Signature Batteries. And Kirkland tuna comes from Bumble Bee factories.

By partnering with already established manufacturers, Costco doesn’t have to dump its own money into research or production facilities. This keeps costs down while still ensuring customers get a tried-and-true product.

Work smarter, not (always) cheaper

Costco fans are a loyal bunch. And it makes sense, when you consider the pains the company goes through to keep that loyalty. One of the ways it’s done this is by establishing their Kirkland Signature brand as a high-quality name-brand alternative.

Costco also managed to do this while keeping its products affordable — or at least competitive. You won’t find Kirkland Signature items in your favorite coupon app, but it still manages to go toe to toe (or price tag to price tag, in this case) with other comparable retailers.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Brittney Myers has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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Shopping in-store gives me headaches, both physical and financial. 

Everyone has their favorite big-box retailer where you can go to buy nearly anything. For some people, it’s Walmart. For others, it’s Costco. For me, I’d rank Target at the top. I love the store’s selection and the fact that most of its locations don’t play music over the loudspeakers (the wrong tunes can ruin my shopping experience). The low prices don’t hurt, either. Despite all this, I do my Target shopping on the store’s website these days. Here’s why.

1. My local store is very crowded

I’ve lived all over the country, and have usually been fortunate enough to have a Target location nearby (actually, in one case, the store closed not long after I moved away — I must’ve been the one keeping them in business). Most of the stores have been fine, and shopping in them was a reasonable experience without too many headaches. Unfortunately, the store in my current city is part of a shopping mall, and it is always way too crowded for my liking. Ever since the start of COVID-19, I’ve been nervous enough in crowded spaces, and visiting this Target location simply isn’t enjoyable to me.

2. In-store selection is usually lacking

Going right along with the last three years of the pandemic and related supply chain issues, it seems as if Target rarely, if ever, has what I’m actually searching for. I tend to buy over-the-counter medications and supplements there, along with other personal care items, and the last few times I set foot in a Target store, the shelves were empty of what I wanted to buy. It’s no fun to drive out there, navigate a vast mall parking lot, run through the store, dodging other shoppers — only to leave empty handed.

3. I am susceptible to impulse buys

The couch in my home office holds proof of another reason I avoid in-person Target runs. It’s a photo-realistic throw pillow in the shape of a frosted donut, and I snagged it during my first Target visit after several months of living in an area without a store nearby. Target has amazing little goodies for sale, and it’s the housewares clearance section that always gets me. Since I’d rather not run up a big credit card tab on my Target shopping trips, it’s best if I avoid that temptation altogether.

4. Free shipping from the website is easily attainable for me

If you want to get free two-day shipping on your orders from Target.com, you need only meet a minimum spend of $35. This is an easy number for me to hit, as I tend to buy my supplements in bulk, and if my total is under $35, I can tack on a bottle of body wash or even some goodies for my very spoiled cats (Target has extremely cute seasonal cat toys and accessories). Target sends me email updates about my orders, and they always come fast, right to my door. I love online shopping, and Target offers a great customer experience.

As much as I love Target, I much prefer being able to keep more money in my bank account by avoiding the temptation to overspend. And with my local store not providing the most enjoyable shopping experience for me, shopping online is a far better fit for my life.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has positions in and recommends Costco Wholesale, Target, and Walmart. The Motley Fool has a disclosure policy.

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There are a few reasons why it pays to file electronically instead. 

Many of us tend to be creatures of habit. We find foods we like, and we consume them regularly. We find a route that’s convenient to work, and we continue to take it, even if there’s a way to shave a few minutes off.

Along these lines, if you’re someone who’s used to filing your taxes on paper, then that’s a habit you may be inclined to uphold in 2023. After all, if it’s always worked out well for you, why change it?

But 2023 is actually a pretty bad year to be filing a tax return on paper. Here’s why.

1. Paper returns take longer to process in general

It typically takes the IRS 21 days or less to process electronically filed returns. With paper returns, the normal turnaround time is twice as long.

But here’s why that’s a problem today. Most people who file a tax return wind up being owed a tax refund. Meanwhile, inflation has been surging since the latter part of 2021, and that’s caused a lot of people to fall behind on bills and struggle financially. And seeing as how a tax refund represents money the IRS owes you already, it’s in your best interest to expedite that refund as much as you can.

If you file your taxes electronically and also arrange for your tax refund to get deposited directly into your checking account, you might get it much sooner than you would with a paper return. And at a time like this, that could spell the difference between being able to pay all of your bills on time versus racking up some debt on your credit cards in the absence of having your money on hand.

2. The IRS is starting off this year’s tax season with a backlog

A recent audit of the IRS found that as of late October 2022, the agency still had 9.6 million outstanding tax returns to process. The IRS fell far behind on processing paper returns during the initial stages of the COVID-19 pandemic, when its field offices closed down. But because of that, the agency has a lot of catch-up work on its hands. And while it’s in the process of ramping up on the hiring front, we can expect 2022’s backlog to persist well into 2023.

Now, remember how we just said that the typical turnaround time for processing paper tax returns is six weeks. Well, that time frame may not apply today. If you file a paper return in 2023, it might take the IRS 12 weeks or more to give it a look, thereby delaying your refund at a time when you could really use the money.

If you’ve always filed your taxes on paper, it’s easy to see why you may not be so excited about making a change. But filing electronically could help you expedite your tax refund and get some financial relief. Also, when you file electronically, you reduce your chances of making an error. And that, too, could be your ticket to a quicker refund.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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